Slowdown in Chinese economy and rising US output plunges price to new low with huge knock-on effects for UK’s North Sea oil industry
The value of Brent crude was hit for the fourth day in a row, this time by figures from the US showing oil production had risen even higher despite the enormous supply glut.
Turmoil in the Chinese stock markets over fears of lower local economic growth also unnerved oil traders. China is the world’s second-largest user of oil and has driven most of the past growth in demand.
The current slump in crude prices is a boost to British motorists as it led to a fall in the cost of petrol. Some gas contracts are also tied to oil prices so there is also downward pressure on the cost of gas used for heating and generating electricity.
But low prices are disastrous for the North Sea offshore oil industry, which needs higher costs to compete for investment against much lower cost-producing regions such as the Middle East. Thousands of jobs have been lost in Aberdeen since the slump began in July 2014.
Prices of Brent on the global market sank to $32.16 before recovering slightly to $33.57, still 2% down on the day.